For many owners of small- and medium-sized enterprises (SMEs), a lot of the risks they face – such as business interruption – may be firsts and leave them unsure of their next move or an appropriate response. So it’s all the more crucial for brokers and advisors to step in and highlight the need for contingency planning amid a noted state of underinsurance in the sector.
“A little bit of experience and creativity can make a huge difference,” Andrew King, head of FAS Global (UK) at Cunningham Lindsey, told
The Telegraph. “It is unlikely the SME will have dealt with this type of situation before, so having someone who is able to see the bigger picture and make recommendations is invaluable.”
Following events such as flooding or a fire, there’s little chance for an uninsured SME to recover financially. King said a small business will often need an insurance payout to cover fixed costs. ‘‘Without this, it won’t take long before it runs out of money and goes out of business.”
As for underinsurance among SMEs, the report cited mindset as among the contributing factors.
“Many small business owners are entrepreneurial and will take the view that, whatever happens, they’ll be able to work around it,” broker MRIB’s managing director Edward Finch was quoted as saying. “Unfortunately this can mean they cut corners on their cover.”
When it comes to cyber insurance, for instance, a 2017 survey by
Argo Group found that
57% do not have any kind of cover, with 32% citing a lack of interest from senior management or the board of directors. The specialty insurer surveyed 150 brokers and 200 SMEs in both the UK and the US.
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